Machinery: Small market with high import dependency
Due to a lack of market size, Kenya has so far had no noteworthy mechanical engineering industry. According to reports, there is limited Chinese interest in setting up local assembly units. However, concrete projects are unlikely to be realized until planned industrial zones are established. Kenya is otherwise a leading importer of machinery in East Africa, mainly from China, India and the US.
Chemical industry: Limited to mixing and filling
Kenya has a tiny chemical industry that mixes and packages imported inputs. The market is too small, and the production costs are too high to build up a chemical industry of its own. The country thus remains dependent on imports. According to UN-Comtrade figures, imports reached US$ 2.3 billion in 2017. Kenya’s most important chemical suppliers are India, China, and Saudi Arabia.
Electric power: Expensive and inadequate electricity supply hinders the economy
Kenya has been pursuing highly ambitious power generation targets for years. However, power cuts and high generation prices are part of reality. There is no evidence of any environmental policy conviction: Whether wind and geothermal energy, coal or nuclear power plants – the only thing that matters is that electricity comes out of the socket. Ethiopian electricity has export potential thanks to unrivaled low-cost hydropower, but it depends on the establishment of a regional electricity network.
Construction industry: Cooling at a high level
Kenya’s high-flying construction industry is cooling down again. The demand for cement is at a four-year low. In the upper price building segment, demand is covered, but there is still room in the lower price segment. Meanwhile, the government is increasingly running out of money for its ambitious infrastructure projects – not least because politicians and public servants are diverting public finances. Foreign companies have, if at all, only a chance to participate as suppliers for high-quality real estate projects and as consultants.
Healthcare sector: No significant market for foreign companies
The public health sector is in a permanent crisis: mismanagement and institutionalized embezzlement are the norm. Therefore, the government cannot fulfill its health policy duties. The beneficiaries of this development are private health care institutions and providers abroad. Foreign companies sell limited amounts of medical equipment and pharmaceuticals to Kenya.
Oil/Gas: Quick exploitation is difficult
Kenya has commercially exploitable oil reserves, which the government and oil companies want to convert into cash as quickly as possible. The first barrels are transported via truck to Mombasa to test market demand for the heavy Kenyan oil. The long-planned crude oil pipeline will be smaller (and cheaper) than expected, according to the latest information. However, an investment decision is still pending because the projected route through the unsafe northern part of the country is questionable.
Food industry: Self-sufficiency target unattainable
As in South Africa, there are many modern grocery stores in Kenya. Foreign chains like Carrefour are setting new standards. Meanwhile, the agriculturally productive area under cultivation is decreasing, while climate change is causing unpredictable precipitation. There is only one answer to this challenge: Modernization, artificial irrigation, greenhouses, and more processing to reduce high losses after harvest. But politicians are not doing enough. The declared goal of self-sufficiency will not be achieved this way.
Textile and clothing industry: Labor and electricity are too expensive
The once prosperous Kenyan textile and clothing industry was replaced by imports of used clothing. However, the government now wants to change the course. Special economic zones with fiscal incentives are supposed to bring the turnaround – first successes have been achieved here. But labor and electricity costs are high, and Ethiopia is a cheaper location.
Environmental technology (water/waste/air): Topic moves onto the political agenda
Politicians are increasingly aware of water, waste and air pollution. Cities like Nairobi can no longer guarantee water supplies, rivers are polluted by wastewater, and urban air quality is deteriorating. Water supply projects, city cleaning initiatives, a ban on plastic bags and import restrictions for old cars are used to counteract this. Recycling is also being discussed. The development of environmental awareness has only just begun, however, and when money is spent on technical solutions, it has so far come primarily from donors.
Food market: Selling opportunities for foreign products
Kenyan agriculture alone can no longer feed the rapidly growing population. Productivity gains don’t cope with droughts, floods, the loss of fertile agricultural land due to building construction, environmental sins and high demand for animal feed. Kenya must, therefore, import more and more staple foods. At the same time, foreign supermarket chains want to offer a broader range of imported products.
Automotive: Private demand concentrated on used cars
Kenya relies on the local assembly of imported kits, which are subsidized by favorable import tariffs. The president wants the public sector to buy only locally produced vehicles. Private demand is concentrated primarily on used Japanese brands. But limited lending and high tariffs are having a negative effect.